Conflict and protocol in the Family Business

Relevant aspects of conflict and protocol in the Family Business

From our legal advice, after exhaustive analysis of the situation of family businesses, the recurrence of problematic situations, commonly known as the conflict in family business. This conflict is frequently generated by the lack of clear definition between family and business roles and the absence of a structured framework that guides the relationship between the two. Likewise, it is relevant to mention the importance of legal documents for notarial acts and services in the regulation and formalization of agreements in this area.

I. Nature and origin of the conflict in the Family Business

The family business is characterized by the coexistence of two interrelated systems: the family and the company. This duality, although it can be a strength, can also generate tensions and conflicts. Some of the common causes of these conflicts include:

• Lack of definition of roles and responsibilities.
• Unaligned expectations between generations.
• Disagreements over the distribution of benefits.
• Decision making based on emotions and family relationships rather than business criteria.
• Lack of training or business vocation of the family members who must take over in management.

II. The Protocol in the Family Business as a prevention tool

Given the reality of conflict, the need arises to have tools that allow it to be anticipated and managed appropriately. In this context, the protocol in the Family Business plays a fundamental role. This document, which is prepared by consensus among the members of the business family, establishes the rules and principles that will guide family relationships within the business environment.

The main aspects addressed by a family business protocol include:

• Definition of the mission, vision and values ​​of the company.
• Establishment of criteria for the incorporation and departure of family members in the company.
• Regulation of succession in the management and ownership of the company.
• Conflict resolution mechanisms.
• Dividend distribution policy.

The development of the protocol requires a process of reflection and dialogue in which all family members must be involved. It is essential that there is a real will to reach agreements and commit to their compliance.

III. Legal documents for notarial acts and services to resolve conflict and protocol in the family business

The company must formalize the Family Protocol in a series of legal documents prepared by the notary as part of its Notary services and that allow the agreements and decisions made to be formalized and validated. These documents provide legal security to the company and its members.

Among the most relevant documents prepared by the notary we find:

• Corporate bylaws: They establish the rules that govern the constitution, operation and dissolution of the company. They are mandatory and their modification requires a general meeting.
• Partners' agreements and family protocol: These documents complement and, sometimes, modify what is established in the statutes. They establish specific agreements between partners on aspects such as the right to preferential acquisition of shares or the conditions for the incorporation of new partners.
• Wills and succession agreements: They are essential to regulate the transfer of ownership of the company after the death of a partner.
• Other notarial services.

The formalization of these documents through notarial acts guarantees their authenticity, integrity and certain date, thus providing certainty and security to the parties involved.

IV. Recommendations to resolve conflict and protocol in the Family Business

Our legal advice strongly suggests that family businesses, if they have not yet established a family protocol, begin the process of developing it. It is essential to have a framework that regulates relationships and prevents possible conflicts.

Furthermore, it is imperative that all relevant agreements and decisions are formalized through the corresponding legal documents, and that these are ratified through notarial acts and services, to ensure their validity and effectiveness.

Finally, it is essential to have adequate advice throughout this process. A specialized legal team can guide the business family in identifying their needs, preparing documents and making informed decisions. Prevention is, without a doubt, the best strategy to ensure the continuity and success of the family business.